-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MBo+NvUecoj4jSY3AzGYvIC+WKAMN3gmX8gNtpE6PMQ3L66NuRGJ6qTg6ppbuLpd Ckm6hTF49zug+ZZ3ycMkfw== 0000072741-02-000133.txt : 20021021 0000072741-02-000133.hdr.sgml : 20021021 20021021141723 ACCESSION NUMBER: 0000072741-02-000133 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20021021 ITEM INFORMATION: FILED AS OF DATE: 20021021 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONNECTICUT LIGHT & POWER CO CENTRAL INDEX KEY: 0000023426 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 060303850 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-00404 FILM NUMBER: 02793692 BUSINESS ADDRESS: STREET 1: SELDEN STREET CITY: BERLIN STATE: CT ZIP: 06037-1616 BUSINESS PHONE: 8606655000 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHEAST UTILITIES SYSTEM CENTRAL INDEX KEY: 0000072741 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 042147929 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05324 FILM NUMBER: 02793689 BUSINESS ADDRESS: STREET 1: 174 BRUSH HILL AVE CITY: WEST SPRINGFIELD STATE: MA ZIP: 01090-0010 BUSINESS PHONE: 4137855871 MAIL ADDRESS: STREET 1: 107 SELDON ST CITY: BERLIN STATE: CT ZIP: 06037-1616 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTERN MASSACHUSETTS ELECTRIC CO CENTRAL INDEX KEY: 0000106170 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 041961130 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-07624 FILM NUMBER: 02793690 BUSINESS ADDRESS: STREET 1: 174 BRUSH HILL AVE CITY: WEST SPRINGFIELD STATE: MA ZIP: 01089 BUSINESS PHONE: 4137855871 MAIL ADDRESS: STREET 1: 107 SELDON ST CITY: BERLIN STATE: CT ZIP: 06037-1616 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUBLIC SERVICE CO OF NEW HAMPSHIRE CENTRAL INDEX KEY: 0000315256 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 020181050 STATE OF INCORPORATION: NH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06392 FILM NUMBER: 02793691 BUSINESS ADDRESS: STREET 1: 1000 ELM ST CITY: MANCHESTER STATE: NH ZIP: 03105 BUSINESS PHONE: 6036694000 MAIL ADDRESS: STREET 1: 1000 ELM STREET CITY: MANCHESTER STATE: NH ZIP: 03105 8-K 1 cover8kslides102102.txt NU 8K COVER 10-21-02 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549-1004 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) October 21,2002 ------------------- NORTHEAST UTILITIES Commission File Number 1-5324 State of Incorporation - MASSACHUSETTS IRS. No. 04-2147929 THE CONNECTICUT LIGHT AND POWER COMPANY Commission File Number 1-11419 State of Incorporation -CONNECTICUT IRS No. 06-0303850 PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE Commission File Number 1-6392 State of Incorporation NEW HAMPSHIRE IRS No. 02-0181050 WESTERN MASSACHUSETTS ELECTRIC COMPANY Commission File Number 0-7624 State of Incorporation - MASSACHUSETTS IRS No. 04-1961130 ------------------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 174 BRUSH HILL AVENUE, WEST SPRINGFIELD, MASSACHUSETTS 01090-0010 ----------------------------------------------------------------- (Address of principal executive offices Northeast Utilities)(Zip Code) (413) 785-5871 -------------- (Registrant's telephone number, including area code) Not Applicable -------------- (Former name or former address, if changed since last report) ITEM 9. REGULATION FD DISCLOSURE The material attached hereto as Exhibit 99, which is incorporated in this Item 9 by reference thereto, is furnished pursuant to Regulation FD. SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. NORTHEAST UTILITIES PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE WESTERN MASSACHUSETTS ELECTRIC COMPANY (Registrants) By: /s/ Randy A. Shoop Name: Randy A. Shoop Title: Assistant Treasurer - Finance THE CONNECTICUT LIGHT AND POWER COMPANY By: /s/ Randy A. Shoop Name: Randy A. Shoop Title: Assistant Treasurer - Finance of Northeast Utilities Service Company, as Agent for THE CONNECTICUT LIGHT AND POWER COMPANY Date: October 21, 2002 EX-99 3 eeislides102102.txt NU EEI SLIDES 10-21-02 Exhibit 99 SLIDE 1 EEI FALL FINANCIAL CONFERENCE PALM SPRINGS, CALIFORNIA OCTOBER 21, 2002 NORTHEAST UTILITIES SYSTEM SLIDE 2 This presentation contains forward-looking statements, which are statements of future expectations and not facts. Actual results or developments might differ materially from those included in the forward-looking statements because of factors such as competition and industry restructuring, changes in economic conditions, changes in weather patterns, changes in laws, regulations or regulatory policies, developments in legal or public policy doctrines, technological developments, volatility in electric and natural gas commodity markets, and other presently unknown or unforeseen factors. Other risk factors are detailed from time to time in the company's SEC reports. SLIDE 3 TOPICS TO COVER TODAY Strategic overview Regulated businesses Competitive businesses Liquidity and financing requirements SLIDE 4 STRATEGIC VISION UPDATED Focus Unchanged Reduce exposure to higher risk regulated assets Sell nuclear units Securitize regulatory assets, other stranded costs Build out CL&P transmission system to remedy critical SW Connecticut supply situation Improve CL&P, PSNH and WMECO distribution reliability through extensive capital upgrades Expand Yankee distribution system to offer more fuel choice and build LNG terminal to reduce winter fuel costs Dedicate resources to improve energy marketing business Add niche energy services businesses to grow profitable business Maintain strong balance sheet SLIDE 5 STRATEGIC VISION UPDATED Elements Under Review Buy additional generation to serve NY and PJM markets Build merchant cable to Long Island Pursue competitive retail business throughout the 11 state region Aggressive share repurchase SLIDE 6 CRITICAL REVIEW INVOLVES WHOLESALE ELECTRIC BUSINESS Earnings continue to be negatively affected by CL&P contract Expires December 31, 2003 Efforts to raise price have failed thus far Competitors changing Enron, Dynegy gone Duke, Constellation still there Dominion, FPL entering Financial institutions increasing presence Heavy dependence on providing full requirements service Need to better manage volume risk Trading activities reduced to reflect changing marketplace SLIDE 7 M&A REMAINS PART OF NU'S VISION Acquire regulated utilities PSNH Yankee Energy Divest regulated generation assets Nuclear Fossil Acquire niche energy firms E.S. Boulos, Woods (electrical) Niagara Mohawk Energy Marketing (marketing) HEC, Denron (energy service) Review all M&A opportunities SLIDE 8 2002 RESULTS HAVE BEEN DISAPPOINTING Graph showing reported and/or estimated earnings for four quarters and full year 2002. First quarter reported earnings were $0.14 per share, $0.22 reported for the second quarter, $0.38 reported for the third quarter, $0.36 to $0.56 estimated for the fourth quarter and $1.10 to $1.30 estimated for the full year. SLIDE 9
SIMILAR CONSOLIDATED EARNINGS PROJECTED FOR 2003 EPS Range Regulated Businesses $1.05 to $1.15 Competitive Businesses $0.15 to $0.25 Parent Company & Eliminations ($0.10) 2003 Earnings Range $1.10 to $1.30
SLIDE 10 REGULATED BUSINESSES Northeast Utilities System SLIDE 11 RETAIL ELECTRIC SALES STABLE DESPITE WEAK INDUSTRIAL SECTOR
Chart showing percentage change from January through September 2002 vs. 2001 - percent change net for each business. Residential Commercial Industrial Total CL&P 2.0 2.8 -2.5 1.6 PSNH 4.7 3.3 -16.6 -1.5 WMECO 2.6 1.3 -2.9 0.8 NU Consolidated 2.6 2.7 -7.8 0.6
SLIDE 12 REGULATED BUSINESSES: CL&P HIGHLIGHTS Seabrook sale will complete total generation divestiture Allowed 10.3% ROE with 50-50 sharing - next rate case effective 1/1/04 Significant T&D investment projected for next several years Overrecovering purchased power costs - extra proceeds used by CL&P to amortize stranded costs Operating performance good SLIDE 13 CL&P CAPITAL SPENDING RISES TO MEET SW CONNECTICUT RELIABILITY NEEDS Picture of map of lower New York State, Connecticut and Long Island with arrows pointing to lines representing proposed expansion of systems for: Middletown to Norwalk 345kV Transmission Bethel to Norwalk 345kV Transmission Long Island Sound Replacement Cable Caption to the right of the picture: Expanding the 345 kV transmission system into SW-CT Phase 1, Bethel to Norwalk ($135mm)* Phase 2, Norwalk to Middletown ($400mm) Replacing the CT - Long Island Cable ($80mm)* * Now under regulatory review SLIDE 14 RELIABILITY SPENDING EXPECTED TO RAISE INVESTMENT BASE
Graph showing capital expenditures and net utility plant (in millions). Capital Expenditures Net Utility Plant 2001 $237 $2,029 2002 (est.) $256 $2,090* 2003 (est.) $317 $2,372 2004 (est.) $423 $2,688 2005 (est.) $363 $2,936 2006 (est.) $366 $3,177 2007 (est.) $373 $3,416 *Actual as of 6/30/02
SLIDE 15 REGULATED BUSINESSES: YANKEE OVERVIEW Rates fixed until 2006, except for annual infrastructure review 11% ROE with sharing $4 million rate cut on April 1 Endorsement of capital expansion SLIDE 16 YANKEE EXPANSION EXPECTED TO ENLARGE SYSTEM CONSIDERABLY
Graph showing capital expenditures and net utility plant (in millions). Capital Expenditures Net Utility Plant 2001 $48 $406 2002 (est.) $73 $416* 2003 (est.) $87 $521 2004 (est.) $107 $602 2005 (est.) $75 $647 2006 (est.) $50 $665 2007 (est.) $50 $681 *Actual as of 6/30/02
SLIDE 17 REGULATED BUSINESS: WMECO HIGHLIGHTS No rate case in near term Much lower capital needs than other subsidiaries, slower growth Allowed ROE 11 percent on stranded costs; uncapped on T&D Capital expenditures, balance sheet stable All generation sold All purchased power contracts renegotiated Standard Offer supply re-bid annually Default service re-bid semiannually SLIDE 18 REGULATED BUSINESS: PSNH HIGHLIGHTS Rates fixed until February 2004 Allowed return 8 percent on regulatory assets; 11 percent on generation, uncapped on T&D Seabrook sale ends power purchase, decommissioning obligations No current plans to auction non-nuclear generation Large decline in industrial sales; continued growth elsewhere SLIDE 19 COMPETITIVE BUSINESSES Northeast Utilities System SLIDE 20 NUEI ORGANIZATION
NUEI Select Energy Generation & Marketing Business Select NGC HWP Select Energy NGS Energy Services - -Wholesale -Generation -Generation -Energy Engineering -M & OS Marketing Assets Assets Services -Electrical - -Retail *Northfield *Mt Tom -Performance Contracting Marketing (1,080 MW) (147 MW) Contracting -Industrial - -Trading *Hydros -Design, Build, Services (191 MW) Operate & Maintain -Engineering & *Gas Turbine Energy Projects Consulting (21 MW) -HVAC and Services Electrical Services
SLIDE 21 COMPETITIVE ENERGY BUSINESSES HAVE A WEAK EARNINGS RECORD Graph showing net income excluding accounting change (in millions). 1999 ($37) 2000 $14 2001 $5 2002 (9 months) ($40) SLIDE 22 2002 COMPETITIVE BUSINESS PERFORMANCE BELOW 2001
(In Millions) 2001 Actual 2002 Projected Wholesale (including NGC) ($13) ($15 - $19) Retail* ($ 8) ($25 - $28) Trading $19 ($16 - $19) Services $7 $5 * Excluding cumulative effect of accounting change resulting in $22.4 million charge in 2001
SLIDE 23 WHERE HAVE THE PROBLEMS BEEN IN 2002? Wholesale: 1) Continued losses on CL&P contract 2) Some profitable 2001 contracts were not renewed 3) High summer demand and higher prices Retail: 1) Extremely mild winter 2) Write-downs of older out-of-the-money contracts Trading: March, April losses from sharp increase in natural gas prices SLIDE 24 WHAT ARE THE FIXES? Wholesale: Achieve better supply pricing on 2003 CL&P requirements Manage position better Achieve successful renewal of full-requirements contracts with acceptable margins SLIDE 25 WHAT ARE THE FIXES? Retail: Several money-losing contracts are expiring Higher margins required before signing new agreements "Rightsize" organization for current marketplace Better plan to manage volumetric weather risk SLIDE 26 WHAT ARE THE FIXES? Trading: Sharply reduced capital at risk Changed personnel Changed focus SLIDE 27 2003 EARNINGS PROSPECTS Wholesale: Modest profits, including NGC and CL&P contract Retail: Break-even Trading: Modest profits Services: Improving profits as range of services grows SLIDE 28 WHOLESALE CONTRACTS Contracts continuing at same level in 2003 CL&P Standard Offer $500mm/annually Municipal/Co-ops/Small IOUs $120mm/annually 12-Month contracts continuing into 2003 with renewal possible NJ Basic Generation Service $475mm 8/1/02 to 7/31/03 Maine Utilities $ 90mm 3/1/02 to 2/28/02 Other opportunities WMECO Default $13mm 7/1/02 to 12/31/02 WMECO Standard Offer $0 in `02; $150mm plus being bid for 2003 Contracts with other suppliers Contracts Not Renewed for 2003 NStar, Nat. Grid $135mm in 2002 SLIDE 29 2003 RISKS Not achieving sales volumes at anticipated margins Weak economy slows service business growth Lack of counterparties continues to reduce trading opportunities Down from 50 to 15 already Execution risks Sourcing supply requirements Weather-related volume risks Credit risks SLIDE 30 LIQUIDITY AND FINANCING REQUIREMENTS Northeast Utilities System SLIDE 31
STRONG BALANCE SHEETS ARE A CENTRAL FOCUS (AS OF 9/30/02) Rate Reduction (In Millions) Common Equity Preferred Total Debt* Bonds NU Consolidated $2,193.9 44.3% $116.2 2.4% $2,640.5 53.3% $1,935.5 CL&P $739.3 43.9% $116.2 6.9% $827.1 49.2% $1,271.8 PSNH/NAEC $418.6 42.4% N/A $569.5 57.6% $518.7 WMECO $151.3 44.8% N/A $186.5 55.2% $145.0 Yankee Energy $229.0** 50.6% N/A $223.6 49.4% N/A NGC $438.7 50.6% N/A $428.0 49.4% N/A *Total debt excludes rate reduction bonds **Excludes equity associated with goodwill
SLIDE 32 RISING CREDIT RATINGS REFLECT STRENGTHENING FINANCIALS
Ratings As Of 1/1/01 Ratings Today Moody's/S&P/Fitch Moody's/S&P/Fitch NU Notes Ba1/BB+/BB- NU Notes Baa1/BBB/BBB CL&P Bonds Baa3/BBB-/BBB- CL&P Bonds A2/A-/A- PSNH Bonds Ba1/BBB-/BB PSNH Bonds A3/BBB+/BBB WMECO Notes Ba1/BB+/BB+ WMECO Notes A3/BBB+BBB+ NGC Bonds N/A NGC Bonds Baa2/BBB-/BBB (BBB- long-term)
SLIDE 33 NU SYSTEM REMAINS EXTREMELY LIQUID Graph showing net system cash as of 9/30/02 is $103M. $350M Regulated Company Revolver: borrowed is $150M, available is $200M. $300M parent/competitive business line: borrowed is $75M, letters of credit is $70M and available is $155. $100M CL&P accounts receivable borrowed: is $40M and available is $60M. SLIDE 34 SEABROOK SALE PROJECTED TO BRING NU $400M OF CASH Schematic chart showing flow of cash. 9/30/02 estimate $38M (4.1% share) from FPL to CL&P. CL&P to use $19M for capital needs and $19M for decom., taxes and other. $21M (Great Bay share) from FPL to NU. NU to use $7M for taxes. $343M (36.0% share) from FPL to NAEC. $42M in cash at NAEC. $55M from NAEC to NU. $106M from NAEC to PSNH. $42M from PSNH to NU. NAEC to use $90M to pay off debt and $134M for decom., taxes and other. SLIDE 35 BALANCE SHEET EASILY SUSTAINS RISING ELECTRIC T&D CAPITAL SPENDING Graph showing total capital spending on distribution, transmission and customer service (in millions). WMECO PSNH CL&P 2000 $23 $55 $193 2001 $28 $80 $220 2002 (projection) $23 $84 $252
SLIDE 36 WE PROJECT CONTINUING PRESSURE FROM REDUCED PENSION CREDITS Graph showing pension costs in millions of dollars. 1998 ($ 44) 1999 ($ 52) 2000 ($ 93) 2001 ($101) 2002 (projected) ($ 73) 2003 (projected) ($ 34) SLIDE 37 MATURITIES, SINKING FUNDS, VERY MODEST; NONE AT CL&P, PSNH, WMECO* Graph showing dollars(in millions). NGC NU ESOP Other Yankee 2002 $24 $23 $3 $1 2003 $27 $23 $3 $1 2004 $31 $24 $2 $1 2005 $38 $26 $2 $21 2006 $21 $2 $1 2007 $4 $1 $1 *Excludes rate reduction bond maturities.
SLIDE 38 MODEST FINANCINGS AHEAD Renew $650 million of revolvers Possibly refinance spent fuel obligations at CL&P, WMECO Issue Yankee debt to repay short-term debt Considering initiating credit ratings for Yankee SLIDE 39 DIVIDEND INCREASE AND SHARE REPURCHASES CONTINUE Dividend rose 10 percent in September to 55 cents/share annualized rate Targeting 10 percent annual increases Bought back 2.3 million shares in 2002 Repurchase of another 9 million allowed by 6/30/03 under board resolution SLIDE 40 SUMMARY High degree of financial flexibility and liquidity Balanced growth initiatives Rising dividend and ongoing share repurchases Healthy regulated businesses with rising capital investments in T&D Competitive businesses that must make a meaningful earnings contribution -----END PRIVACY-ENHANCED MESSAGE-----